2.) The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:

Year: Cash Flow (I) Cash Flow (II)

0 -$62,000 -$18,200

1 33,000 9,800

2 33,000 9,800

3 33,000 9,800

a-1 If the required return is 12 percent, what is the profitability index for both projects?

Project I

Project II

a-2 If the company applies the profitability index decision rule, which project should the firm accept?

Project I

Project Il b-1

What is the NPV for both projects?

Project I

Project II b-2

If the company applies the NPV decision rule, which project should it take?

Project I

Project II